Important events today:

15:00 UTC – USD: New home sales

16:00 UTC – EUR: ECB President Lagarde Speech

EUR/USD is trading lower amid moderate gains in the US Dollar (USD) in the early Asian session on Monday. This week, the focus will be on the US PCE inflation data for January. This data may provoke volatility in the market.

The minutes from the January 30-31 FOMC meeting indicate that the interest rate is likely at the peak of this tightening cycle. Federal Reserve (Fed) officials will review incoming data to determine whether the current stagnant U.S. inflation trend is temporary or sustainable. Thursday’s Core Personal Consumption Expenditures (Core PCE) price index may provide some hints on the trajectory of U.S. inflation. Weaker-than-expected data could put pressure on the US Dollar and serve as a tailwind for EUR/USD.

European Central Bank (ECB) policymakers want to wait for first quarter data to confirm that inflationary pressures are easing, but an increase in wage growth will allow them to ease the tightness of current monetary policy somewhat. ECB members have agreed that policy will be eased, but there is no clear consensus on the exact timing. Several ECB policymakers will wait for more data before easing monetary policy.

On Wednesday, market participants will be watching for annualized U.S. gross domestic product data for the fourth quarter (Q4). Thursday will see the release of German retail sales data for January and the first reading on the consumer price index. This week, the Core PCE (U.S. consumer spending price index) will be released on Thursday. Traders will focus on this data and look for trading opportunities on EUR/USD.

Recommendations: Watch the level of 1.0840, trade from it on the rebound.